Which of the following statements reflects the belief of the critics of industrial policy?
A) The government allocates scarce resources more efficiently than markets.
B) Industrial policy could evolve into a government giveaway program.
C) Industrial policy gives domestic industries a competitive advantage over important trading partners.
D) Industrial policy encourages unfavorable terms of trade with foreign countries.
E) Industrial policy overprotects domestic producers.

Question

Quizplus · Accepted Answer

Critics of industrial policy often argue that it could become a form of government giveaway program, where the government picks winners and losers in the market and provides subsidies to some industries at the expense of others. This could lead to inefficiencies, distortions in the market, and potentially harm domestic and foreign businesses alike.

Which of the Following Statements Reflects the Belief of the Critics